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  • The Boston Globe OnlineBoston.com Boston Globe Online / Business / Globe 100
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    BULLS & BEARS
    Rising market can't lift all stocks

    High-tech boom fuels many high fliers; a few others remain on the launch pad

    By Kimberly Blanton, Globe Staff, 05/18/99

    The Bulls

    1. CMGI Inc.
    2. Lycos Inc.
    3. EMC Corp.
    4. Geotel Communications Corp.
    5. Aware Inc.

    [ See complete chart ]


    The Bears

    1. Ergo Science Corp.
    2. Natural Microsystems Corp.
    3. Starmet Corp.
    4. Viisage Technology Inc.
    5. Davox Corp.

    [ See complete chart ]


    Wall Street Darlings
    Companies ranked by market value to sales ratio.
    1. Aware Inc.
    2. CMGI Inc.
    2. Lycos Inc.
    4. Geotel Communications Corp.
    5. Concord Communications Inc.
    6. EMC Corp.
    7. Biogen Inc.
    8. Alkermes Inc.
    9. Vertex Pharmaceuticals Inc.
    10. American Superconductor Corp.

    [ See complete chart ]

    Wall Street Wallflowers
    Companies ranked by market value to sales ratio.
    1. Perini Corp.
    2. Friendly Ice Cream
    2. Filene's Basement Corp.
    4. Arch Communications Group Inc.
    5. Trend-Line Inc.
    6. Clean Harbors Inc.
    7. J. Baker Inc.
    8. NSC Corp.
    9. Elcom International Inc.
    10. Aerovox Inc.

    [ See complete chart ]

    he bulls and bears among Massachusetts stocks demonstrated how volatile the high-technology industry can be - even in good times.

    Some stocks were lifted higher and higher by a Dow Jones industrial average that broke record after record in 1998. The biggest share-price increases were enjoyed by CMGI Inc., Lycos Inc., and EMC Corp. - each of which has ties to the world's hottest technology, the Internet.

    But companies with problematic or outmoded technologies struggled mightily in the one-year period ending March 31, despite a Dow that broke through 10,000.

    ''Much of the wealth created in New England has come from the growth in technology companies,'' said Sara Johnson, an economist for Standard & Poor's DRI in Lexington. The downside, she said, is that ''although they may account for a lot of the growth, they also account for a lot of the job losses.''

    Take Ergo Science Corp., which cut its 60-person work force in half in December. The biotechnology company turned in the worst stock performance among Massachusetts companies, which were analyzed during the March-to-March period.

    Ergo's stock plunged to under 2 a share. The reason for Ergo's woes? The Food and Drug Administration said ''no'' to its diabetes drug.

    Early in 1998, Davox Corp.'s stock was flying high, and the company announced that it would acquire a tiny Texas company, AnswerSoft Inc. But Davox's stock lost 80 percent of its value during that year, as sales of its telephone-center software disappointed Wall Street. The stock, which had been above 31 a year ago, hit a low of 6 3/16 on March 31.

    Natural Microsystems Corp.'s long-time president, Robert P. Schecter, is optimistic that 1999 will bring the payoff for a shift in the company's target market for its computer telephone products. But 1998 was a year of fast changes in telecommunications and proved a tough one for Natural Microsystems: The company's stock fell nearly 88 percent, to 4 15/16 in March.

    The Internet industry has caused turmoil but also opportunity. Those companies that stayed ahead of the curve have thrived.

    There is the remarkable story of Banyan Systems Inc. Once a money-losing local-area network supplier, Banyan shifted into Internet products, including Switchboard, a compilation of telephone directories. Revenues and profits grew at a steady pace last year. And, characteristic of Internet companies, Banyan's stock shot up, from 51/2 a share in March 1998 to 12 3/16 a year later.

    CMGI Inc. had the right idea at the right time. It invested in a range of fledgling Internet ventures just as the Internet's potential was being grasped by investors. Some argue that investors are creating a speculative bubble in Internet stocks. Whatever is driving the craze, it's a boon to CMGI's stock: It was 183 a share in March 1999 - 12times its value a year earlier.

    The stock of Lycos Inc., which provides an Internet portal to its growing list of customers, is also riding on Internet mania. Lycos's stock nearly quadrupled during the year that ended March 31, to 86 a share. It's still going up. The stock was trading last week in the 111 range.

    Geotel Communications Corp.'s technology, a telephone-system software, became popular with highly automated companies such as American Express. As a result, its stock more than tripled before Cisco Systems agreed to buy the small company in April.

    Why did Cisco agree to pay $1.92 billion in stock for Geotel? It's all in the technology.

    This story ran on page D17 of the Boston Globe on 05/18/99.
    © Copyright 1999 Globe Newspaper Company.

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